Moscow, capital of a Russia where the economy is no longer full steam ahead.

In the shadow of its grandeur, signs of deprivation.

Growth is slowing.

Two per cent this year is on the cards.

That compares to over four in recent years - seven before the financial crisis - in line with the rapid expansion enjoyed by the other emerging BRIC economies.

Increasingly, its problems are seen as deep set, hard to cure.

Like low investment - less than 4 per cent of GDP on education and not much more for health.

Low life expectancy - 64 for men.

And record low intake into the workforce after decades of population decline caused by the collapse of the Soviet Union.

On the high side: the key central bank rate held stubbornly at 5.5 per cent - and no hint of any rate cuts to come.

But with high inflation, deputy governor Ksenia Yudayeva says there's a limit to what the bank can do.

(SOUNDBITE) (English) Ksenia Yudayeva, First Deputy Governor, Central Bank of Russia, saying:

"Unfortunately, all kinds of changes which the Russian economy needs to go through right now, they can not happen overnight. It requires changing of behaviour of many, many people."

Others blame a dependance on the oil and gas that has powered both the Russian economy, and its exports.

As the energy tax take fluctuates with the ups and downs of global demand, government budgets dip in and out of deficit.

But deputy prime minister Igor Shuvalov says other industries don't have the same export muscle.

(SOUNDBITE) (Russian) Igor Shuvalov, Russian First Deputy Prime Minister, saying:

"We have good projects, like building nuclear power stations. These are all positive projects. Yes, there are too few of them yet to get us out of that noose where we depend on oil and gas. It hasn't happened yet."

Corruption - and political interference - also still pose fears for Western investors.

Joe Rundle of ETX Capital.

(SOUNDBITE) (English) Joe Rundle, Head of Trading, EXT Capital, saying:

""The real question mark for investors is how you get access to Russia in a way that means you will get your money back without a political decision just to take away an asset or change the rules in a very significant way."

Optimists point to a change in trend.

Inflation is coming down - slowly.

The birth rate is going up - slowly.

And life expectancy - among the lowest in Europe - has increased by five years in just under a decade.

 

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